Your problem may be with mencoder.

Code:
/usr/bin/mencoder '/home/fatpenguin/filmwad.com/public_html/vshare/video/blam_blam666.wmv' -o /home/fatpenguin/filmwad.com/public_html/vshare/flvideo/11906887221731556464.flv -of lavf -oac mp3lame -lameopts abr:br=56 -ovc lavc -lavcopts vcodec=flv:vbitrate=500:mbd=2:mv0:trell:v4mv:cbp:last_pred=3 -srate 22050 -ofps 24

This will work if you are using latest version of mencoder. Just send a mail to your web host with this command. Ask him to run it on command prompt of the server and see if video is getting converted to FLV or getting some error.